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Care Homes Facing Financial Crisis

06 May 2016 | Updated 01 January 1970

A BBC report has revealed that a quarter of UK care homes are at risk of closure.

The disclosure in the You and Yours BBC radio programme this week means that approximately 5,000 of the 20,000 care homes in the country may be targets for closure because they are servicing too much debt.

Returns for those operating in the sector have been squeezed by a number of factors including government cutbacks to local authorities and the introduction of the National Living Wage of £7.20 an hour and experts within the industry believe that there may well be casualties.

“It leaves a very small pot to encourage people to stay in this market and run care homes and to invest in them and to create the extra capacity that we all know this market is going to need as the baby boomers get old and need to go into care," explained Nick Hood, Business Risk Advise, Opus Business Services, when he talked to the BBC.

The You and Yours programme revealed that US property companies and private equity operations are now accounting for much of the funding in the UK and their modus operandi was for quick returns on investment.


Care homes “extremely fragile”

Speaking to TwinFM, Caroline Abrahams Charity Director at Age UK observed there was mounting evidence from all quarters showing that the care home sector was “extremely fragile and facing a real struggle to survive”.

She believed that without significant investment, it seemed increasingly likely that more and more care homes would have to close their doors to all but the most affluent who could afford to pay premium fees.

“We do not foresee a ‘big bang’ and a wholesale reduction in care home places overnight but rather a process of attrition as one by one care homes stop taking on older people on ordinary incomes or shut down altogether,” she told TwinFM. “Either way though the outcome will be the same. In a year or two’s time we fear waking up to a situation where in big areas of the country older people in urgent need of a care home bed will have literally no place to go.”    

Ms Abrahams stated that with an ageing population and the threat of dementia there was a continuing need for good quality, affordable care home places and “in the end it is government’s responsibility to face this problem and make sure they continue to be available”.


South east under-performance

The latest findings come only a week after another BBC report quoted a Care Quality Commission investigation into the service being delivered in the south east of England.

It found over an 18-month period that ‘too many’ of the 1,200 homes it looked at needed to improve their service provision. In 44% of homes in Kent, Sussex and Surrey the CQC rated them as ‘inadequate or requiring improvement’ and that only 1% could be described as ‘outstanding’.


Government response

The Department of Health accepted that a number of care providers had found the “current market challenging".

“No-one will be left without care if a home closes,” insisted a DoH spokeswoman. “Following the failure of Southern Cross, we empowered the CQC to monitor the finances of the largest care providers and to provide early warning of likely insolvencies so we can better protect vulnerable people who use their services."

Picture: The faces are smiling ones but the reality is that 25% of UK care homes are facing the real threat of closure according to a BBC investigation

Article written by Mike Gannon | Published 06 May 2016


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